Which Is Worse On Credit: Chapter 7 Or Chapter 13?

Law Blog

When considering bankruptcy, there are many factors you should analyze before making the decision to file, and one of the factors to evaluate is the effects bankruptcy will have on your credit. Both branches of bankruptcy, Chapter 7 and Chapter 13, can have negative effects on your credit, and here are several things to understand about the effects these branches can have on your credit file and credit score.

Both branches stay a while

The first thing to understand about bankruptcy is that filing for it will result in a post on your credit report, and this is true for both Chapter 7 and Chapter 13. The difference in this is the amount of time the posting will stay on your report. For Chapter 7, you will have this posting on your report for 10 years from the date the trustee discharges your case. The 10-year period is not from the filing date.

For Chapter 13, the posting on your credit report will stay on for 7 years, and this 7-year period often begins when you file your case. When you use Chapter 13, you are placed on a plan to repay your debts, and this plan lasts up to five years. This means that after the five years is up, your posting of the Chapter 13 bankruptcy should fall off your report approximately two years later. Because of this difference, the effects of Chapter 13 on your credit are slightly better than those of Chapter 7.

Lenders do not view Chapter 13 as negatively as Chapter 7

The second thing to know about the effects of bankruptcy on your credit involves the way lenders view Chapter 7 versus Chapter 13. Most lenders look more favorably on Chapter 13 compared to Chapter 7, and this is basically because Chapter 13 is the repayment branch of bankruptcy. A person filing for Chapter 13 will repay the debts that he or she has instead of simply getting them wiped out with no recourse. Your credit report will reveal which branch of bankruptcy you filed, and this is how creditors and lenders will know.

Both branches will affect your credit in some ways. If you are trying to compare the effects of each branch of bankruptcy and do not know which would be better for you, you should schedule a visit with a bankruptcy lawyer to find out more about your unique situation. For more help, contact a company like Martinez Law Firm today.


7 August 2019

Choosing To Fight

Although I am far from perfect, I have focused on abiding by the local laws for the vast majority of my life. Unfortunately, about five years ago, I realized that I was being accused of a crime that I didn't commit. I thought about letting the trial run its course, but then I realized that fighting would be important to ensure my future. I teamed up with a great lawyer, and things became much easier overnight. My legal counsel told me what to do and what to avoid, and he was able to prove the facts in a court of law. This blog is all about choosing to fight charges.